Forum Post: Insider trading is perfectly legal for members of the U.S. Congress - and they refuse to pass a law that would change that.

Insider trading is perfectly legal for members of the U.S. Congress - and they refuse to pass a law that would change that.

http://endoftheamericandream.com/archives/insider-trading-is-legal-for-members-of-congress-and-they-refuse-to-pass-a-law-that-would-change-that

You would think that some of the more ethical members of Congress would want to close this glaring loophole, but it just isn't happening. Legislation has been introduced from time to time that would end this practice, but it has gotten very, very little support. The Wall Street Journal recently published an article about this issue... http://online.wsj.com/article/SB10001424052748703431604575522434188603198.html ...which described the current situation this way....

"A few lawmakers proposed a bill that would prevent members and employees of Congress from trading securities based on nonpublic information they obtain. The legislation has languished since 2006."

But even though insider trading is legal for members of Congress, they would never take advantage of the situation, would they?

Well, there is at least one study... http://www.professorbainbridge.com/professorbainbridgecom/2010/05/congressional-insider-trading-bill-stalls.html ...that seems to indicate that members of the U.S. Congress have been much more successful in the U.S. stock market than most members of the general public....

"A 2004 study of the results of stock trading by United States Senators during the 1990s found that that senators on average beat the market by 12% a year. In sharp contrast, U.S. households on average underperformed the market by 1.4% a year and even corporate insiders on average beat the market by only about 6% a year during that period. A reasonable inference is that some Senators had access to - and were using - material nonpublic information about the companies in whose stock they trade."